Contract management refers to the task of managing contracts for vendors, employees, or other parties.
To effectively manage the contract management process, contract managers must have legal knowledge.
What is contract management and why is it so important?
Contract management refers to the process of managing contract creation, execution, and analysis in order to maximize financial and operational performance. It also reduces financial risk. Companies are under increasing pressure to cut costs and improve their performance. It is a time-consuming aspect of business that can be difficult to manage. This makes it imperative to have an automated and efficient contract management system. Learn all about contracts & claims management, from top experts for free
is the process of identifying and controlling claims by individuals or public bodies to recover losses from any member of the Association. Disposing of such demands for payment requires skills in insurance law, adjusting/investigation, loss control engineering, and general business. Supervising the legal, adjusting, and investigation services required to resolve such claims is called Claims Management.
is the management of claims against customers and third parties. This includes investigations, litigation support, settlements, and any other matters.
Successful contract management is built upon these elements
It doesn’t suffice that an organization has contract management professionals. To meet increasing compliance and analysis needs, employees must be supported by software and processes. Become an expert in claims management course for free. Organizations can expect to see the following results if a contract management strategy has been implemented successfully:
These expected benefits for business and financial returns are already being realized.
The supplier is responsive and cooperative to the needs of the company.
There are no surprises or contract disputes in the organization.
Both parties are satisfied with the delivery of services.
Good contract management is essential for all activities
Successful post-award activities and upstream activities are the foundation of contract management. Pre-award should be a time for employees to focus on the purpose of the contract and whether the supplier is able to fulfill the terms.
Further, we can identify the individual steps within each stage. We can further break down the process into nine steps. Each step contributes to one the five major stages. This allows us to better manage the end-of-quarter crunch, which is a common occurrence when it comes time to sign new contracts. These are the steps for each stage.
1. Initial requests. Begin the contract management process by identifying contracts and supporting documents that support their purpose.
2. Authoring contracts. Although writing a contract manually can be time-consuming, it can be done quickly with automated contract management software.
3. Negotiating the contract. Employees should be able to compare the versions and note any discrepancies after drafting the contract. This will reduce negotiation time.
4. Approval of the contract. This is where the majority of bottlenecks happen. This can be avoided by users creating customized approval workflows that include serial and parallel approvals. Users will keep decisions moving quickly.
5. Execution of the contract. The contract can be executed electronically to allow users to manage and speed up the signing process.
6. Obligation management. This requires extensive project management to ensure that key stakeholders meet the deliverables and that the contract’s value doesn’t decline in its early stages of growth.
7. Amendments and revisions. It is difficult to gather all the documents necessary for the contract’s initial drafting. It is difficult to find missing items and systems must be set up to allow for amendments.
8. Auditing and reporting. Contract management is not about drafting a contract, then putting it in the filing cabinet. Contract audits can be used to determine the compliance of both parties with the agreement and any potential problems.
9. Renewing. Manual contract management can lead to missed renewal opportunities and reduced revenue. An organization can automate the process to identify renewal opportunities and create new contracts.
What is contract management software?
Although it is traditional to manually manage contracts through file cabinets and folder storage, this practice can lead to inefficiencies that can negatively impact an organization’s overall efficiency.
These problems can be solved electronically with contract management software. All contract paperwork can be organized using contract management software. It can organize all contract paperwork, including renewals and signings.
Integrating with an automated contract management system can save countless hours and automate many processes involved in managing contracts, creating more value for companies.
Robert Powell, founder, and CEO of Rob Powell Biz Blog stated that contract management software stores key information regarding contracts related to providers, commercial leases, and licensing agreements. Contract management software’s main purpose is to simplify administrative tasks by creating one centralized record of all contract processes.
Contract management software makes it possible to monitor complex contracts without having to rely on paper.
Powell stated that the most important feature of contract management software was its ability to allow employees from multiple locations to access one single place contract.
How to become a contract manager
Some schools offer a degree that focuses on contract management. However, not all universities offer this degree. This education is not the only option. However, there are many business degrees that will help you succeed in this industry. You can then add some contract management experience.
Jared Weitz, founder, and CEO of United Capital Source stated that a bachelor’s degree is sufficient to be certified. A contract manager must have a solid understanding of communication and writing skills, as well as a keen eye for deadline management and organization.
This career path can also benefit from a law degree. Management of contracts requires legal knowledge. Both contract management and negotiation rely on legal expertise.
It’s a smart idea to meet other contract managers if you are interested in becoming a full-time manager. Although there is no single way to become a contract manager, it is worth having some business experience.
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